The Economic Engine of Political Change

Category: Policy Issues

NB: Part 1 of this series can be found here . The concluding chapter of Democracy in Chains is titled “Get Ready”. Here MacLean gathers all of her implications together and portrays the arc of influence that I summarized in Part 1 of my responses . Readers absorb details of just what the cause is capable of doing. I won’t recount the chapter. Instead, I would like to focus on pages 225-228, where MacLean argues that constitutional checks and balances should be removed because they…Read more»

Note: Initially published in The American Enterprise, Jan. 3, 2002. Dear New York: Are Term Limits Worth It? Many New Yorkers are wondering whether the term limits law they passed by referendum in 1993 is worth it. In pondering this question, New Yorkers join in one of history’s great democratic debates. The ancient Greeks grappled with this question, and term limited certain offices. America’s Founding Fathers also wrestled the pros and cons on the issue:…Read more»

Today would have been Norman E. Borlaug’s 102nd birthday. He died in 2009 after an enormously productive life of helping others to help themselves. Known as the “father of the Green Revolution” for introducing high-yield wheat varieties to impoverished economies, his work was recognized with a Nobel Peace Prize among other awards for “the man who saved a billion lives”. I like the photo here because it evokes the academic scribbler side of his entrepreneurship but also…Read more»

A delightful story , “Our night as an Uber driver — Using a $500,000 Rolls-Royce,” appears in the current issue of Car and Driver. One passage, in particular, reveals that the writer may have read Madmen. Either that, or the writer has arrived at sound public choice and political change analysis through reasoned examination: In Uber’s mind, the company is Doing Good. In the eyes of the cabbies, their lunch is being eaten by a bunch of amateurs not subject…Read more»

Chris Coyne, the book review editor at Public Choice, asked me to write a review of the new Elgar Companion to Public Choice, Second Edition , edited by Michael Reksulak, Laura Razollini, and William Shughart. This book is a second edition of the first version that came out in 2003. It consists of 29 chapters The published version of the review is gated, but below I offer a link to the pre-publication version. Here are the first few paragraphs: Co-Editors…Read more»

The U.S. Department of Transportation is pushing for an in-flight ban on mobile phone calls, saying they are disruptive and unpopular with passengers and flight crews, according to this Wall Street Journal story . The airlines are pushing to keep control. They would presumably experiment with different rules and situations, converging on the best solution for them and their passengers. It’s interesting to bear in mind what the valuable good in question is. It’s the audio frequency (i.e., sound that’s audible to most people ) within close proximity…Read more»

Did you know that Oklahoma is ranked 28th in population but in 2011 had one of the nation’s largest unfunded pension liabilities? The Reason Foundation’s Pension Reform Newletter carries an interview with Oklahoma state legislator Randy McDaniel, who explains: OPERS is the state’s second largest retirement system. In 2010, the system had a $3.3 billion unfunded liability, … The big picture is the state had over $16 billion in total unfunded liabilities. In a reform process entering its fifth…Read more»

I have discussed in some detail airline deregulation as a case study of political change within the economic framework laid out in Madmen. Interstate trucking, long-distance telecommunications, railroads, banking, stock brokerage, oil and gas, are additional cases where deregulation occurred. Future research into these cases may suggest ways in which political entrepreneurs were able to “arbitrage between academic ideas and political inefficiencies.” But political change– or at least the potential– is in the here and the…Read more»

Policy ideas do not always bear fruit in the real world. What was different with 1970s transportation deregulation? In a previous post I noted that political entrepreneurs find ways to use ideas to break down resistance to change, to overcome “structure-induced stability”. Ed and Wayne write in Madmen that, “political change happens when entrepreneurs notice and exploit those loose spots in the structure of ideas, institutions, and incentives” (134). As noted by Rodrik , political entrepreneurs will…Read more»

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.